Private Equity – an Optimistic Landscape

BDC is a development finance Institution tasked with the industrialisation of Botswana. Founded in 1970 as a company with the government as its sole shareholder, its main aim is to develop the commercial, industrial and agricultural sector through the funding of commercially viable projects with developmental impact. The firm’s main instruments are debt and equity, but they do have tailor made funding solutions for each project they invest in. BDC has been in existence for over 45 years and their offices are in Gaborone, Fairgrounds. In an interview, the firm’s Head-Marketing Communications, Boitshwarelo Lebang provides a fascinating glimpse into the world of private equity in the Botswana region, and what it takes to be successful in this market.

Although the global economy has been uncertain over the past months, to what extent do you think that the private equity landscape has been fairly positive, with several regions specifically enjoying positive developments?

Given that we primarily participate in the African private equity (PE) space, we can say there has been positive developments despite uncertainties in the global economy, especially as many African economies are generally affected by movements within the extractive industries. Private equity activity is customarily linked with the macro economic performance of every economy and in Africa, currency devaluation and commodity prices have been very volatile.

The commodity price reductions and depreciation of currencies has caused a real tightening of liquidity in the region, as traditional fundraising avenues have become more constrained. This has positioned private equity as the best alternative for capital raising, bringing in more deals and opportunities for better returns.

Whilst challenges remain, do you think that the atmosphere is rife with investors who are seeking to branch out and
continue to expand?
The current situation has had an effect on the approach and strategy of many participants in the market. There have been some investors who have taken a conservative approach, but others have put their hands up to branch out and take advantage of the situation. The bullish investors would generally look out for companies with cross border growth potential and defensive sectors such as health care, education, food and water. There is indeed a significant demand for healthcare and education created by a young population. Rapidly growing economies continue to provide opportunities and demand in financial services, consumer goods and services, real estate and infrastructure.

With this positive atmosphere around many areas of the private equity market, to what extent do you think there remains the constant requirement for advisors and consultants to have a major input to investors?

Being successful in Africa requires people on the ground who understand the markets. Advisors and consultants can greatly assist in building up proprietary deal flow, developing viewpoints on deals and constantly navigating through changing markets. Given the developing nature of the private equity market in Africa, bottlenecks are often thrown in the process, but these barriers can be dealt with guidance from experienced experts working on the ground. The input by advisors extends to accessing relationships with regulators, which may be helpful in terms of changes and reform on policy, as well as regulatory deliverables.

What contribution does your firm make to private equity deals that ensures that the best possible outcome is reached for your client, so they are able to gain the most for their investments?
BDC strives to balance developmental aspirations with commercial sustainability, thereby offering promoters a unique array of funding products geared towards having the greatest socio-economic and commercial impact. BDC therefore brings to the table a structural flexibility, driven by the need to maximise returns and create sustainable value for the promoter and all stakeholders.

Do you have any plans for the future that you would like to share with our readers?
BDC in the medium term is focusing on energy, infrastructure, manufacturing, and technology sectors. We are ready to partner and collaborate with investors who are ready to transform this continent through exploring the abundant opportunities it offers.

Company: Botswana
Development Corporation
Name: Boitshwarelo Lebang
Head-Marketing Communications
Address: The Tower,
Fairscape Precinct,
Plot 70667, Fairgrounds Park
P/Bag 160 Gaborone
Phone: 267 3651300